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00:00Let's get Peter McGuire in. He's the CEO of XM Australia on Jackson Hole and more.
00:06Peter, great to have you on, as always, on NDTV Profit. And let's start with exactly that.
00:12Markets, I think, world over in a sort of wait-and-watch mood.
00:16Is too much being placed on what Mr Powell will say at the symposium?
00:22Well, good morning, Tamara. I don't know of too much. I mean, you know,
00:25we've been working towards this for many, many months and everyone's had their,
00:28I suppose, in their calendar, you know, we're getting to that point as far as Jackson Hole.
00:33No, I don't think so, because there's a split jury there. It's either going to be 25 or 50
00:38and the probability of about 35 or 40 percent probability of 50 basis points.
00:43So this is all impacting on what we've seen this week as far as sell-off, as far as dollar
00:49has been quite dramatic. It's bounced a little bit to the upside in the last matter of hours,
00:53but, you know, it was nearly through 101 there. So I feel as though we're going to wait for every
00:59word that Fed Chair Powell says later today. And I think we'll be analysing every sentence.
01:07We will be analysing every sentence. What's the bet, Peter? We should bet today that we will have
01:11at least one sentence which says it depends on the data that we see over the next few weeks,
01:17because that has been the consistent stance of the Fed, right? We're not going to stick
01:21our neck out and promise anything. It depends on how the data moves. So looking at that and
01:28considering the fact that a September rate cut has pretty much been priced in, what really is
01:32the upside that could come out of this speech? Well, there's got to be something as far as the
01:38labour market. Maybe that's going to be the, or from an economic standpoint, Tamana, that's the
01:43only things that are really going to, I think, ring the bell. That wasn't a good number that
01:49came out in the last 24 hours as far as that revision down about 818,000 jobs. Take it any
01:54way you want. It's as bad as, well, it's the worst you've seen since 2009. So he's got to put a little
02:01bit of sugar on the sandwich today and make it more palatable. And that's where I think traders
02:07are mindful that there could be a 50 basis point cut. So, you know, this is all the factors that
02:12have got to be weighed in on this. And we've just got to work through it over the next matter of
02:17weeks and see how it drops. Peter, good morning. It's Amina joining in as well. 2024 has been a
02:24year for gold. It's eased off just a little bit, of course, on back of the dollar strengthening
02:31in overnight trade. There are some people who believe $2,700 on gold as early as the rate cut
02:39in September. What is your strategy? What do you advise? Current levels still look good for a buy
02:45on gold. Well, Samina, great to see you. And I think so. You know, when you're putting a couple
02:50of things, first off, if you're looking in the gold silver ratio, it's about 85 to one. It was
02:55that yesterday. So it's probably close to it now. So that's something that traders need to be mindful
03:00of. The second part of it is, yeah, it was 2550. It's back at about 2525. It's not a big step up,
03:06really, to 2700 as that US dollar comes under pressure to the downside. This is all going to
03:12factor in. If they cut it by 50 basis points, I think you've got every chance you could see a
03:162700 handle. You know, I'm not sure where we are by year end, but they're still, you know,
03:22best part of four and a bit months to go. And yeah, I think 27 will be taken out by end of year,
03:28without a doubt. Peter, that's, of course, the story with gold. But how do we not talk to you
03:35about crude? Who would have thought that crude would have it so rough this year, right? Where
03:41are your bets? We've seen a little bit of a recovery, again, in overnight trade, but for
03:46the year crude remains lower. For the next six months, do you feel like there could be a recovery
03:51on crude prices and hence it becomes a long trade, maybe even between now and the 18th of September
03:57and maybe even a slightly longer time horizon? I think there's many answers to that, Samina. First
04:03off, remembering where we were, you know, as far as that October situation last year, Israel and
04:10the situation there. So oil went for a big run up over Christmas and then naturally it was sold off
04:16from that, you know, early 90s sort of number. And it's really crated all the way back. Geopolitics
04:21are going to play a part, but we've got to look at the structural weakness from a global economic
04:26conditions, Eurozone and certainly from China's consumption. So this is all a factor going
04:33forward. If geopolitics really ratchets up in the months ahead, then this could greatly impact
04:38price. So I don't think it's worse days than they might be behind us. And I feel as though
04:45you could see a leg up if things develop on that geopolitical front. Peter, just, you know, looking
04:51forward and we're talking about what the big factors are going to be, I think we would be
04:56amiss if we don't talk about the US elections. In fact, even as we speak right now, Kamala Harris is
05:02giving her landmark speech at the Democratic National Convention and we have live footage
05:06of that coming in as well. So all eyes on Trump versus Kamala. This week, the likelihood of Kamala
05:13coming in is inching up. It's not seeming as impossible as it was maybe a couple of weeks ago.
05:20How much of a difference does that make to how not just US markets, but the global markets
05:25move coming ahead? Well, we're at two and a half months away, Tamana, from Election Day. So there's
05:32the first part. It's narrowing down from a timeline perspective. Yes, certainly Kamala
05:37Harris and we've got to be conscious of that. She's now running the show or pretty much going
05:41to be the front runner, one would think at the present time anyway. So is that may gain momentum
05:48as far as an attractiveness to the voter base? I think that this is all going to add, I think, much
05:56excitement to the markets over the next matter of six to eight weeks leading into October
06:01because of a rate cut policy, because of an election. All of these factors are going to,
06:06I think, increase volatility. That's all I'll put out there. But I think it's going to be
06:11an interesting race and we haven't got long to wait to get a result. Right. Very lastly, Peter,
06:18I think the China story keeps haunting us, right? We keep hoping that things will change,
06:23the economy will recover, base metals will get a bit of a relief. But there's been no sustainable
06:29rally across any of those ferrous or non-ferrous metals. From the way we look at things going ahead,
06:36how do you approach the base metal universe? Is there anything here you're constructive on?
06:41And if yes, can you please share with our viewers what looks good to you?
06:45Well, first off, you've got to be looking at the structural weakness from an iron ore perspective,
06:48Samita. That's been really crated. So that's been a good trade to be sure. But copper isn't too bad
06:55when you're looking at it from a big picture analysis. It languished there at just over 8000,
07:01then it hit the mid eights. Now it's the best part of 91.30. It seems to have a little bit more,
07:07I think, possibility as far as movement to the upside. But I think it's going to be whipsawing
07:13as far as volatility again until you get something dramatic. Don't forget,
07:17you saw those manufacturing PMIs come out of Eurozone. They were very, very soft.
07:22I've got the numbers there, 45.8 for July and 52.10 for the UK. So when you're looking at
07:32a contraction across that Eurozone, and that's motor cars and that's everything hard metal,
07:38that's not a good sign. And that naturally flows into the China situation.
07:43Indeed. Thank you very much, Peter. It's always great chatting with you.
07:47Have a great weekend and we will catch you soon.